If there is one point to be emphasized from the 2007 economic crisis, it would be the decades long trend of wars; political cronyism and deficit spending that sustains these debt driven collapses. It is no surprise that to sustain this trend, the solution being offered to fix it, is a “Hobsonean Choice”. Hobson’s choice is a “take it or leave it” option—an opportunity to accept or reject one imposed solution that is designed to sustain that trend. When banks began failing during the 2007 crisis, they had to be re-capitalized because they are the cogs in the system of deficit finance. The process is dependent on Central Banks printing fiat currency that is loaned to member banks to grease the wheels of the economic roulette wheel. Predictably, it has functioned to benefit a tiny 1% minority in control of the system, at the expense of the majority.

Cheap money funneled to the banking system reinvested in Government debt, fueled U.S. economic growth during the Clinton Administration. It was far cheaper to borrow Japanese Yen at zero percent, and invest it in high yielding U.S. Treasuries than it was to build new factories. The carry trade was extremely successful in attracting a huge flow of financial capital to the U.S. banks, but it was used to finance U.S. Government debt, and to fuel speculation in the stock market’s Dot Com mania. Very little went towards building a sustainable economy to benefit the American worker although the service sector did expand and service jobs were created.

Since 1959 in the U.S., M1, which is the measure of money (currency, travelers checks, demand deposits) in circulation, has increased 1,100 percent rising annually from $138 billion in 1959 to its current level of $1.68 trillion. Each year, the Government has issued debt, which is monetized when Central Banks print fiat currency to purchase this debt. When the Fed prints money, interest rates drop. Rates are now so low that banks are being paid a premium to take money at rates below the inflation rate. It is far cheaper for them to hold dollars and do nothing or reinvest in Government debt rather than risking it on Main Street U.S.A.

Historically, a large portion of this debt has been the result of U.S. sponsored wars funded through supplemental spending. In 2010 defense spending was listed at $685 billion, yet the Iraq war has cost substantially more in borrowed money than the original estimate of $200 billion [1]. In 2008, Congress paid out $845 billion more in emergency supplemental expenditures than the total defense budget was in 2009. The actual cost for that war according to Stiglitz and Blimes, was $3 trillion in 2008. [2] The Brown University study conducted in 2011 projects up to $4 trillion in unforeseen expenditures for both wars in Iraq and Afghanistan. The real cost of these wars have been deferred to the future through debt financing.

In the same way, the financing of the 12-year Vietnam War was deferred and paid for through the Federal Reserve’s monetizing process. The cost of the Vietnam War had exceeded the U.S. Government’s budget and it resorted to issuing debt, paid for with fiat currency from the Federal Reserve. This new money was above and beyond what was mandated by the Bretton Woods agreement that had set a ratio of $35 to 1 ounce of gold. By 1970, as French President DeGaulle began repatriating U.S. dollars for gold, that ratio was more realistically at $800 to 1 oz. Gold. The U.S. had exceeded its budget for several years during the Vietnam War, and had been debasing its currency. The U.S. Government under President Nixon, suspended the gold standard, in order to legitimize the excessive amount of dollars that had been printed to fund the war and its account deficits. Since, then, fiat currency is not based on actual gold assets in the U.S. Treasury, but on the economic capacity of nation states. The mechanism of wealth confiscation had been legitimized.

By eliminating the verifiable system of monetary control, the increasing use of fiat currency used in Bank Open Market Operations has led to insurmountable debt levels. The inevitability of default, juxtaposed against the necessity for more and more credit to keep the system going, drives the need for continuous accounting tricks that mask insolvencies; unemployment rates; inflation rates; and promotes wage suppression and confiscation of hard assets such as homes for families. The excessive debasing of the currency also promotes speculation in the financial markets.

The war in Libya, which began in March 2011, although it is being marketed as an affordable template for future operations against other nations, also exceeds budget estimates. Secretary of Defense Gates estimates the cost at $550 million for the one week of U.S. participation. [3] But Senator Brad Sherman (D-CA) has pointed out that the Pentagon accounting obscures the true cost by eliminating overhead costs of development of weapons systems and salaries of pilots and soldiers. The full cost is billions per week if we use full-cost accounting instead of marginal accounting Senator Brad emphasized. [4]

The war involves media propaganda, automated systems such as cruise missiles, drones, remote intelligence operations, aircraft carriers and vessels in a support role to NATO. The Pentagon has promoted the Libya war as a model for future wars during this period of austerity. U.N. Ambassador, Susan Rice sees U.S. expenditures in Libya as being the same as what we would undertake in a national capacity. [5] The expenditures after the first week, are being borne by the European members of NATO, and although it appears to have minimized the cost to the U.S., the fact is that the U.S. spends more on NATO than the combined expenditures of all the other members. It is the main reason why NATO can afford to exist. France, and Britain could not function without U.S. money and technical support in their merciless bombing war in Libya.

The increasing pressures on the European financial system have brought the Euro-Zone to the brink of default, and the market has signaled a collapse as being inevitable even as the Europeans are being asked to increase expenditures on defense from its current 2% of GDP. As the brutal wars drag on, it is inevitable that that the Europeans themselves either must begin to print fiat money, in contradiction to their constitution or borrow it from the Federal Reserve in unlimited quantities. Simply, put the PIIGS nations, Portugal, Italy, Ireland, Greece and Spain cannot repay loans used to fund account deficits back to European banks. The Euro-Zone nations are stuck in a state of impending default with the need for continuous bailouts, but nevertheless the wars persist.

Today’s military and Central Bank lexicon now has a favorite term, namely “unlimited”. NATO has used this term in referring to the duration of its occupation and bombing campaign in Libya; the Federal Reserve has also used this term in its latest proclamation of its capacity to provide cash to deal with the Euro-Zone crisis. But from the bottom up, this term signifies the extent to which the system will go to sustain a policy that has become more widely known by its negative affects upon the majority than for its promise of sustaining the American Dream.

The ramifications of the system of deficit financing being experienced around the world are inflation; economic ruin; depressed wages and wars. Yet, the public is offered no other option other than this one solution that has caused the widest disparity between rich and poor. The pattern of diverting money from the productive sectors of the economy into military adventurism and into fraudulent financial products has had a devastating effect on the working class in the U.S. Since the disparities between the two classes have become so pronounced, it has raised questions of the moral nature of the system.

The Machiavellian doctrine is suddenly being questioned worldwide. From Israel to Greece and to Wall Street, New York, crowds are standing in direct opposition to policies of the sovereign states not out of political ambition or ideological motivations, but out of the need to survive. The consensus worldwide is that it is immoral. Rioters in Greece besides standing up to the IMF’s imposed austerity have introduced a system of barter. Revolutions started in North Africa are against the punishing effects of inflation and the status quo. But despite the negative effects of the Quantitative Easing I and II, in 2011, offers of unlimited payouts have been extended to flailing Euro-Zone, French and German banks with critical exposure to Greek sovereign debt. Senator Bernie Sanders disclosed in a bill attached to the Dodd-Frank financial reform bill, the Federal Reserve has paid out $16.1 trillion dollars to U.S. and European banks since the 2007 crisis, but has paid nothing to Main Street U.S.A. yet the payments continue.

Whether we choose to accept or reject the fact that the current system does not work fairly and that a new system must be formed is immaterial—nature is imposing Hobson’s choice of one option—survival. The majority is expressing a deep moral authority over which the sovereign state has no control. How the state chooses to function under these new conditions of scarcity, is the big question of the century. Whether we take pause and choose to respect the ancient ideals upon which humanity was founded, or conversely choose to ignore the limits imposed on the demonic aspects of our nature, is a choice democratic societies cannot fail to make in the face of the reality facing the global community.

So far, the consensus from many nations around the globe is that this can no longer be a decision made by the minority of the sovereign rulers with a limited Machiavellian perspective. Such a perspective has shown the best efforts of a morally weak system to be technological wizardry and legal maneuvering that drives wealth confiscation and war. A philosophy of might makes right, is the lesson of the last five centuries. Statistics highlighting the social disparities in the world and casualties support this statement.

To these leaders, charity is a bargaining tool to be used to gain political advantage even as money for war is guaranteed; Reparations are seen as being immoral and atonement is a quaint curiosity. Morality has become an objective reality, outside of human consciousness. Mankind in effect, by living with immorality as a norm, is foregoing centuries of effort at sustaining a human centered reality based on the idea of an ultimate source of all that is good.

What seems to motivate us is no longer based on an idea of an ultimate good, but is contingent on financial reward for those who can pay to play. Society functions on a new-found premise practiced by the powerbrokers, that the majority are all accepting of the decades of war, and cronyism and injustice. These elites of the leadership class have a long history of exploiting psychological theory and practice to deploy mass psychology, but the immoral nature of many of their actions remain clear. All out war is not humanitarian action; detention and torture without trial is not justice; Morality is not inconsequential and the end does not justify the means. Getting back to a moral foundation is by necessity, an individual initiative, but when many individuals with similar interests gather, the elite call it rioting or mob action, but the violence emanates from their policies.

We welcome new writers, bloggers and ideas for clubs. Contact us and send ideas and writing samples

Order Esther Iverem’s We Gotta Have It: Twenty Years of Seeing Black at the Movies. 1986-2006. An essential overview of the “New Wave” in Black cinema—a complex, often surprising perspective on art, society, and history. More than 400 reviews, plus essays and interviews from your favorite movie critic.

Early raves for We Gotta Have It:

"Esther Iverem brings a voice that is deft, insightful and good-humored to the subject of African American culture."
--Tavis Smiley

"Esther Iverem… is, hands down, one the smartest cultural critics of her generation. This wonderful romp through the last two decades of black-subject films will have you visiting your local video store on the regular. It’s one of those book we gotta have."
--Robin D. G. Kelley

"The work of African American filmmakers continues to out pace critiques and commentary by African American film critics. Esther Iverem closes this gap.”
--Warrington Hudlin